American Natural Gas Will Be Heating 2 Million British Homes Within Five Years

Nearly 2m homes in the UK will be heated by shale gas from the US
within five years, under a deal agreed on Monday that is likely
to be the first time major exports of the controversial energy
source are used in the UK.

The US government has kept a tight rein on exports since the
shale gas boom started more than five years ago. But the deal struck by energy company Centrica marks the
start of a new era in gas use in the UK, because it opens up the
market to cheap supplies from the US, as North Sea gas fields run
out and pipelines to Europe remain expensive.

Under the deal, Centrica
will pay £10bn over 20 years for 89bn cubic feet of gas annually
– enough to heat 1.8m homes – from Cheniere, one of the first US
companies to receive clearance from the federal government to
export shale gas in the form of LNG (liquefied natural gas). The
first deliveries, by tanker, are expected in 2018.

Though there was no immediate danger of a cut-off, because of
imports through pipelines connecting to supplies from Russia and
Norway, the tightening of supply raised grave concerns. The
failure of a key pipeline on Friday morning caused an immediate doubling of gas prices in the spot
market – though prices fell back later as the problem was
resolved, the incident highlighted the vulnerability of the UK to
energy shocks, because of the high dependence on gas imports for
heating and power generation.

The prime minister, David
Cameron, was forced to intervene last week to reassure
households that there would be no cut-off. On Monday he said: "I
warmly welcome this commercial agreement between Centrica and
Cheniere. Future gas supplies from the US will help diversify our
energy mix and provide British consumers with a new long-term,
secure and affordable source of fuel."

There have been other deals on US gas imports to the UK in the
past two years, including a deal struck by BP and
one from British Gas, but they are unlikely to reach the volume
of the Centrica deal and may take longer to reach delivery.

Andrew Pendleton, head of campaigns at Friends of the Earth, said
of current imports: "Emergency gas shipments to maintain
Britain's energy security are yet further evidence of our
shambolic energy strategy. It makes no sense for the UK to rely
increasingly on overseas shipments of ever more expensive gas
while ministers sideline the vast potential of homegrown energy
from the wind, waves and sun. It's time to pull the plug on our
fossil fuel dependency and switch to a 21st century energy policy
based on clean power and slashing waste."

Shale gas has brought about a revolution in US
energy, with thousands of wells drilled across the country
releasing billions of tonnes of fuel. Gas prices have plummeted
as a result, to about $2 a unit, compared with about $10 to $12
in Europe and Japan, but those price falls have not yet affected
the international market.

That is because the US has behaved, in the words of the
International Energy Agency, as a "gas island". Exports have been
restricted, in part by government regulation that has favoured
domestic use, and by the lack of infrastructure for converting
the gas to liquid and transferring it to tankers.